Exhibit 4
AGREEMENT TO TERMINATE OPTION AGREEMENT
AND STOCKHOLDERS' AGREEMENT
AND TO AMEND EMPLOYMENT AGREEMENT
This Agreement to Terminate Option Agreement and Stockholders'
Agreement and to Amend Employment Agreement is made and entered into as of the
23rd day of April, 1999, by and between CMP MEDIA INC., a Delaware corporation
(the "Company"), and XXXXXX X. XXXXX ("Xxx").
WHEREAS, the Company and Xxx are parties to an Option Agreement dated
as of November 27, 1996 (the "Option Agreement") under which Xxx holds an option
to purchase a total of 943,800 shares of Class A Common Stock of the Company;
and
WHEREAS, the Company and Xxx are parties to an Employment Agreement
dated as of November 27, 1996 (the "Employment Agreement") under which Xxx is
entitled to be paid severance by the Company in the event his employment with
the Company is terminated by reason of his Dismissal Without Cause or his
Resignation for Good Reason (as defined therein), provided that he complies with
certain restrictive covenants concerning the Company as set forth in the
Employment Agreement; and
WHEREAS, the Company, Xxx, Xxxxxx X. Xxxxx and Xxxxxxxxx X. Xxxxx are
parties to a Stockholders' Agreement dated as of November 27, 1996 (the
"Stockholders' Agreement") under which Xxx holds 377,520 restricted shares of
Class A Common Stock of the Company; and
WHEREAS, the Company is presently exploring strategic alternatives
which may include a merger or sale of the Company resulting in a Change in
Control (as defined in the Option Agreement and the Employment Agreement) (such
merger or sale hereinafter referred to as a "Transaction"); and
WHEREAS, potential parties to a Transaction have indicated that
uncertainty regarding Dan's rights under the Option Agreement following
consummation of a Transaction may present impediments to a proper valuation of
the Company and to a successful consummation of a Transaction; and
WHEREAS, to facilitate the Company's consummation of a Transaction, Xxx
is willing to waive all his rights under the Option Agreement (including his
right to exercise any options thereunder) and to terminate the Option Agreement,
in exchange for which the Company is willing to modify certain provisions of the
Employment Agreement and terminate the Stockholders' Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties, the parties
hereto, intending to be legally bound, hereby covenant and agree as follows:
Section 1. TERMINATION OF OPTION AGREEMENT.
In the event that the Company consummates a Transaction on or before
March 1, 2000, the Option Agreement shall terminate in its entirety immediately
preceding the consummation of such Transaction, and neither
Xxx nor the Company shall have any further rights or obligations thereunder. In
furtherance but not in limitation of the foregoing, upon the consummation of a
Transaction (a) every option to purchase shares of Class A Common Stock of the
Company under the Option Agreement shall expire and all rights thereunder shall
be extinguished, and (b) Xxx shall not be subject to any pre- or post-employment
covenants under the terms of the Option Agreement.
Section 2. AMENDMENT OF EMPLOYMENT AGREEMENT.
In the event that the Company consummates a Transaction on or before
March 1, 2000, the Employment Agreement shall be automatically and without
further action of the parties amended as of the business day immediately
preceding the consummation of such Transaction as follows:
(a) Section 3.3(a)(A) shall be amended to read in its entirety as follows:
"(A) On his own behalf or on behalf of any other person or entity, (1)
participates or is involved in or has direct responsibility for the
day-to-day management or operation of a Competitive Business; (2) owns,
in whole or in part, beneficially or of record, directly or indirectly,
an equity interest (or an interest convertible into equity) in a
Competitive Business; or (3) renders services to a Competitive Business
as a director, officer, employee or independent sales representative or,
to the extent such services relate directly to the activities of such
Competitive Business that compete with a CMP Business, as a consultant,
advisor or agent. (By way of illustration, services rendered to a
Competitive Business as an investment banker would not in themselves be
deemed to relate directly to such activities of such Competitive
Business.)"
(b) Section 3.3(a)(D) shall be amended to read in its entirety as follows:
"(D) Employs or causes any person or entity other than the CMP Group to
employ any former employee of the CMP Group within six (6) months after
the voluntary resignation of such former employee from the CMP Group."
(c) Section 3.3(a)(F) shall be amended to read in its entirety as follows:
(F) Communicates publicly (other than pursuant to subpoena in a legal
proceeding) or to the press, or writes or produces for publication in any
medium, on the subject of, or with express or implied reference to, the
CMP Group in a manner intended to disparage the CMP Group or any of their
former or current stockholders, directors, officers or employees in their
capacities as such. For the purpose hereof, "implied reference" shall
mean a reference that does not expressly name the CMP Group or any of
their former, current or future stockholders, directors, officers or
employees but that nevertheless would be understood by the average reader
or audience-member to refer thereto. Notwithstanding the foregoing, if
the CMP Group or any of their former or current stockholders, directors,
officers or employees publicly disparage Xxx, it shall not be deemed a
violation of this clause (F) for Xxx to communicate publicly in
reasonable response to such disparagement.
(d) Section 3.3(b) shall be amended to read in its entirety as follows:
"(b) Notwithstanding the provisions of paragraph (a) of this Section 3.3,
Xxx shall not be deemed to be engaged in competition with the CMP Group
solely by reason of Dan's ownership of (i) a direct or indirect equity
interest of five percent (5%) or less in the securities of a Competitive
Business or (ii) an interest in a mutual fund which owns an interest in a
Competitive Business, provided that Xxx has no influence or control over
the selection of such mutual fund's investment decisions."
(e) Section 3.5(c) shall be amended to read in its entirety as follows:
"(c) During the period in which the Company is making payments to Xxx
pursuant to Article IV, Xxx shall, at such times as the Company may
reasonably request and as do not unreasonably interfere with Dan's other
permitted business activities or commitments, provide information,
testimony and assistance in connection with the prosecution or defense of
any claims by or against the Company (other than any claims with respect
to which Xxx is an adverse party) arising out of matters of which he
acquired knowledge while an employee of the Company. The Company shall
reimburse Xxx for all reasonable out-of-pocket expenses he incurs in
rendering such assistance."
(f) Section 3.5(d) shall be amended to read in its entirety as follows:
"(d) During the period in which the Company is making payments to Xxx
pursuant to Article IV, Xxx shall not willfully make any oral or written
statement which reflects adversely upon the character, honesty, credit,
efficiency or business practices of the CMP Group or its former or
current stockholders, directors, officers or employees in their
capacities as such. Notwithstanding the foregoing, if the CMP Group makes
any oral or written statement which reflects adversely upon the
character, honesty, credit, efficiency or business practices of Xxx, it
shall not be deemed a violation of this paragraph (d) for Xxx to
communicate publicly in reasonable response thereto."
(g) Section 4.1 shall be amended in its entirety as follows:
"(a) In the event that Dan's employment with the Company terminates by
reason of his Dismissal Without Cause or his Resignation For Good Reason,
the Company shall, in consideration of Dan's compliance with the
restrictive covenants set forth in Article III and in lieu of any other
severance obligations to Xxx, provide the following:
(i) The Company shall pay Xxx through the period ending on the
earlier of (A) the third anniversary of the date of his termination of
employment or (B) the date Xxx attains the age of sixty-five (65) (the
"Severance Period"), an annual amount of $991,561. Payments shall be
made in bi-weekly installments or on such other periodic basis as the
Company then makes salary payments to its employees generally.
(ii) If Xxx elects to receive continued healthcare coverage
from the Company pursuant to the provisions of Section 601 et seq. of
ERISA ("COBRA"), the Company shall continue to pay a share of the
applicable premiums for such COBRA coverage so that the cost to Xxx
(excluding any tax benefits provided by the Company Code Section 125
premium conversion plan) shall be no greater than the cost to Xxx for
healthcare coverage while he was actively employed immediately prior to
his termination of employment. To the extent that the Severance Period
extends beyond the COBRA period and Xxx elects to convert to an
individual insurance policy at the end of the COBRA period, the Company
shall pay a portion of the conversion premium through the balance of
the Severance Period so that the net cost to Xxx (excluding any tax
benefits provided by the Company Code Section 125 premium conversion
plan) shall be no greater than the cost to Xxx for healthcare coverage
while he was actively employed immediately prior to his termination of
employment. The obligation of the Company with respect to healthcare
coverage
hereunder shall terminate in the event that Xxx becomes covered under
the group healthcare plan of another person or entity providing
comparable benefits.
(iii) For a period of six (6) months from the date of Dan's
termination of employment (or from such later date as, at the Company's
request, he continues to have use of the Company's voice-mail and
e-mail systems), (A) Xxx xxx continue to use the mailboxes in the
Company's voice-mail system which were assigned to him during his
employment, and (B) the Company shall cause all e-mails which are sent
to the mailboxes in the Company's e-mail system which were assigned to
him during his employment to be forwarded to such e-mail mailboxes
outside the Company's email systems as he may designate, provided that
he shall promptly forward to such person as the Company may designate
any e-mail communications he receives which relate to the business of
the Company. Xxx shall be entitled to retain the Company laptop
computer (including software other than network access software), Palm
Pilot, home fax machine and home printer which he is using as of the
date of his termination of employment, provided that he first gives the
Company access to the laptop computer so that the Company may remove
any Company confidential information resident thereon.
"(b) In addition, the Company shall have the right, but not the
obligation, to require Dan's continued compliance with the restrictive
covenants set forth in Article III for up to two (2) years after the
expiration of the period for which the Company is obligated to pay Xxx
under paragraph (a) of this Section 4.1, in consideration of which the
Company shall continue to pay Xxx, during the period of time elected by
the Company, on the same basis and in the same manner as set forth in
paragraph (a) of this Section 4.1. Such right shall be exercisable by
the Company by giving Xxx written notice of exercise no later than
six 6) months after termination of his employment with the Company."
(h) The definition of "CMP Business" in Article VII shall be amended to read in
its entirety as follows:
"`CMP BUSINESS' shall mean any publication, product or service that, on
the date of the Transaction, (a) the CMP Group publishes, produces or
provides or (b) the CMP Group has a bona fide plan or intention to
publish, produce or provide within the succeeding 12-month period, the
research and development of which the CMP Group has devoted substantive
time and attention to, and which plan or intention Xxx has actual
knowledge of
before he engages in any activity competitive with such CMP Business as
contemplated by clause (A) of Section 3.3(a)."
(i) The definition of "CMP Group" in Article VII shall be amended to read in its
entirety as follows:
"`CMP GROUP' shall mean the Company or any subsidiary in which it holds
a majority interest."
(j) A definition of "Competitive Business" shall be inserted in Article VII to
read in its entirety as follows:
"`COMPETITIVE BUSINESS' shall mean (a) any publication, product or
service that competes directly with a CMP Business or (b) any business
more than 15% of the gross revenue of which is earned from one or more
publications, products or services that compete directly with one or
more CMP Businesses."
(k) The definitions of "Direct Competitor", "Directly Competitive Company",
"Indirect Competitor" and "Indirectly Competitive Company" shall be deleted from
Article VII in their entirety.
Section 3. TERMINATION OF STOCKHOLDERS' AGREEMENT.
In the event that the Company consummates a Transaction on or before
March 1, 2000, and, in connection therewith, Xxx xxxxx the restricted shares of
Class A Common Stock which he holds under the Stockholder' Agreement, the
Stockholders' Agreement shall terminate in its entirety immediately upon his
sale of such shares, and no party thereto shall have any further rights or
obligations thereunder. In furtherance but not in limitation of the foregoing,
following his sale of such shares Xxx shall not be subject to any pre- or
post-employment covenants under the terms of the Stockholders' Agreement.
4. EFFECTIVENESS OF AGREEMENT.
This Agreement shall remain in full force and effect until the earlier
of the date on which a Transaction is consummated or the close of business on
March 1, 2000. If a Transaction has not been consummated on or before March 1,
2000, then this Agreement shall be null and void as of its inception, and Xxx
and the Company shall have all of their respective rights and obligations under
the Option Agreement and the Employment Agreement as if this Agreement had never
existed.
Section 5. MISCELLANEOUS.
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective heirs, representatives, successors and permitted
assigns. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York, without reference to its
principles regarding choice or conflicts of law. This Agreement shall survive
any merger, sale or other disposition of the Company and shall survive the
termination of Dan's employment with the Company.
IN WITNESS WHEREOF, Xxx has executed this Agreement and the Company has
caused this Agreement to be executed by an officer thereunto duly authorized on
the day and year first above written.
CMP MEDIA INC.
By /s/ Xxxxxxx X. Xxxxx /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx XXXXXX X. XXXXX
Title: President & CEO
Attest:
[CORPORATE SEAL]
/s/ Xxxxxx X. Xxxxxxxxx
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